Getting insurance agent and broker compensation out of health insurer medical loss ratio (MLR) calculations would probably lead to a big drop in MLR rebates. Analysts at the U.S. Government Accountability Office (GAO) estimate that excluding producer comp from Patient Protection and Affordable Care Act (PPACA) MLR calculations in 2012 would have cut total MLR payments 74 percent.
That would have reduced the average size of a rebate to $15.21 per plan enrollee in 2012, from $58.50. In 2011, the first year the PPACA MLR rebate program was in effect, excluding producer comp would have cut the average rebate 75 percent, to $20.90.
The GAO analysts reviewed the PPACA MLR program in a report prepared at the request of Sen. John Rockefeller IV, chairman of the Senate Commerce, Science and Transportation Committee.
PPACA now requires insurers to spending at least 85 percent of large group revenue and 80 percent of individual and small group revenue on health care and quality improvement efforts.